RELATED AUDIO & VIDEO

"Diving operations stopped because of weather conditions," the country's transportation secretary Joseph Emilio Abaya said, adding that 661 of the 831 passengers and crew on the ferry had been accounted for.

The 40-year-old ferry was approaching Cebu late in the evening when it was struck by the departing cargo vessel, the Sulpicio Express 7, leaving two huge holes in the freighter's bow. The ferry sank in minutes, about 1km off the coast.

Small planes and helicopters also scoured the waters and coastal areas of Cebu island for survivors, officials said.

Many of the survivors were sick from swallowing oil and seawater, disaster officials said.

Scores and sometimes hundreds of deaths in ferry accidents occur in the Philippines, an archipelago of 7,100 islands with a notoriously poor record for maritime safety. Overcrowding is common, and many of the vessels are in bad condition.

Divers found four bodies outside the sunken ferry hours before the search was halted, said Commander Noel Escalana, a naval operations officer.

"During the dive, they saw bodies from the windows," he told reporters, saying the divers did not attempt to retrieve them. "It's dangerous to enter the ship...Because they need special equipment and extra oxygen tanks."

Commander Escalana added that rescuers had no idea how many people were trapped inside the ship.

That vessel collided with a tanker in the Sibuyan Sea in December 1987, killing 4,375 on the ferry and 11 of the tanker's 13-man crew.

The owners of the ferry involved in Friday's accident said it was carrying 723 passengers, 118 crew and 104 cargo containers. It had an authorized capacity of 1,010 passengers and crew and 160 containers.

The captains of the two ships are alive but have yet to be questioned, said Rear Admiral Luis Tuason, the coast guard operations chief.

Secretary Abaya said initial information showed the cargo ship loaded with container vans bound for Davao on the southern island of Mindanao hit the ferry's "vulnerable part" on the right side.

"We felt the cargo ship hit us and minutes later we noticed our ship was listing," passenger Aldrin Raman told reporters. "I grabbed a life vest and jumped overboard. I saw many passengers doing the same."

One of the crew said the ferry sank within 10 minutes.

"The collision left a gaping hole in the ferry and water started rushing in, so the captain ordered (us to) abandon ship," the crew member said. Most of the passengers were already wearing life jackets before the ship sank, he added.

Fishermen on shore said they saw flares.

"It was very dark and we could hear a lot of people shouting, asking for help," said George Palmero, a 35-year-old fisherman who helped pull 10 survivors from the water.